UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number 1-7584
 TRANSCONTINENTAL GAS PIPE LINE COMPANY, LLC
 (Exact name of registrant as specified in its charter)
 Delaware
    
    74-1079400(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 2800 Post Oak BoulevardP. O. Box 1396Houston, Texas
    
    77251(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code (713) 215-2000
 No Change
 (Former name, former address and former fiscal year, if changed since last report)
 Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.  Yes þ No o
 Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).  Yes o No o
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See definitions of accelerated
filer, large accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange
Act. (Check one):
 Large accelerated filero
    
    Accelerated filero
    
    Non-accelerated filerþ
    
    Smaller reporting companyo(Do not check if a smaller reporting company)
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act).  Yes o No þ
 REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTIONS H (1)(a) AND (b) OF FORM 10-Q AND
IS THEREFORE FILING THIS FORM 10-Q WITH THE REDUCED DISCLOSURE FORMAT.




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PagePART I. FINANCIAL INFORMATION:Item 1. Financial Statements Condensed Statement of Income for the three months
ended March 31, 2009 and 2008
    
    
    5Condensed Balance Sheet as of March 31, 2009 and
December 31, 2008
    
    
    6Condensed Statement of Cash Flows for the three months
ended March 31, 2009 and 2008
    
    
    8Notes to Condensed Financial Statements
    
    
    9Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    17Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    20Item 4T. Controls and Procedures
    
    
    21PART II. OTHER INFORMATION
    
    
    21Item 1. Legal Proceedings
    
    
    21Item 1A. Risk Factors
    
    
    21Item 6. Exhibits
    
    
    24
  Forward Looking Statements
   2




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
    
    Amounts and nature of future capital expenditures;
    
    Expansion and growth of our business and operations;
    
    Financial condition and liquidity;
    
    Business strategy;
    
    Cash flow from operations or results of operations;
    
    Rate case filings; and
    
    Natural gas prices and demand.
  
    
    Availability of supplies (including the uncertainties inherent in assessing and
estimating future natural gas reserves), market demand, volatility of prices, and the
availability and cost of capital;
    
    Inflation, interest rates and general economic conditions (including the current
economic slowdown and the disruption of global credit markets and the impact of these
events on our customers and suppliers);
    
    The strength and financial resources of our competitors;
    
    Development of alternative energy sources;
    
    The impact of operational and development hazards;
    
    Costs of, changes in, or the results of laws, government regulations (including
proposed climate change legislation), environmental liabilities, litigation and rate
proceedings;
    
    Our costs and funding obligations for defined benefit pension plans and other
postretirement benefit plans;
    
    Changes in maintenance and construction costs;
    
    Changes in the current geopolitical situation;
    
    Our exposure to the credit risk of our customers;
    
    Risks related to strategy and financing, including restrictions stemming from our
debt agreements and future changes in our credit ratings and the availability and cost of
credit;
 3




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
    
    Risks associated with future weather conditions;
 
    
    Acts of terrorism; and
    
    Additional risks described in our filings with the Securities and Exchange Commission (SEC).
    4




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PART 1  FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
  
    Three Months EndedMarch 31,2009
    
    
    2008(Restated)Operating Revenues:Natural gas sales
    
    $
    13,019
    
    
    $
    30,321Natural gas transportation
    
    
    229,983
    
    
    
    235,857Natural gas storage
    
    
    36,489
    
    
    
    37,321Other
    
    
    10,269
    
    
    
    3,127Total operating revenues
    
    
    289,760
    
    
    
    306,626Operating Costs and Expenses:Cost of natural gas sales
    
    
    13,018
    
    
    
    30,394Cost of natural gas transportation
    
    
    6,675
    
    
    
    5,028Operation and maintenance
    
    
    60,650
    
    
    
    54,884Administrative and general
    
    
    40,320
    
    
    
    34,681Depreciation and amortization
    
    
    60,925
    
    
    
    55,014Taxes  other than income taxes
    
    
    12,708
    
    
    
    13,482Other expense, net
    
    
    1,420
    
    
    
    2,672Total operating costs and expenses
    
    
    195,716
    
    
    
    196,155Operating Income
    
    
    94,044
    
    
    
    110,471Other (Income) and Other Deductions:Interest expense
    
    
    23,489
    
    
    
    24,327Interest income  affiliates
    
    
    (4,267
    )
    
    
    (5,109
    )Allowance for equity and borrowed funds used during construction (AFUDC)
    
    
    (2,129
    )
    
    
    (1,328
    )Miscellaneous other income, net
    
    
    (2,088
    )
    
    
    (2,108
    )Total other (income) and other deductions
    
    
    15,005
    
    
    
    15,782Income before Income Taxes
    
    
    79,039
    
    
    
    94,689Provision for Income Taxes
    
    
    
    
    
    
    35,966Net Income
    
    $
    79,039
    
    
    $
    58,723
  5




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March 31,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent Assets:Cash
    
    $
    201
    
    
    $
    428Receivables:Affiliates
    
    
    2,364
    
    
    
    3,419Advances to affiliates
    
    
    225,006
    
    
    
    186,249Others, less allowance of $422 ($424 in 2008)
    
    
    102,250
    
    
    
    91,309Transportation and exchange gas receivables
    
    
    12,657
    
    
    
    10,649Inventories
    
    
    91,336
    
    
    
    87,891Regulatory assets
    
    
    93,496
    
    
    
    86,361Other
    
    
    23,048
    
    
    
    10,253Total current assets
    
    
    550,358
    
    
    
    476,559Property, Plant and Equipment:Natural gas transmission plant
    
    
    7,085,537
    
    
    
    7,071,491Less-Accumulated depreciation and amortization
    
    
    2,340,978
    
    
    
    2,294,112Total property, plant and equipment, net
    
    
    4,744,559
    
    
    
    4,777,379Other Assets:Regulatory assets
    
    
    220,864
    
    
    
    219,472Other
    
    
    45,510
    
    
    
    46,306Total other assets
    
    
    266,374
    
    
    
    265,778Total assets
    
    $
    5,561,291
    
    
    $
    5,519,716
  6




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March 31,
    
    
    December 31,2009
    
    
    2008LIABILITIES AND OWNERS EQUITYCurrent Liabilities:Payables:Affiliates
    
    $
    24,567
    
    
    $
    25,708Other
    
    
    125,393
    
    
    
    126,667Transportation and exchange gas payables
    
    
    4,444
    
    
    
    2,851Accrued liabilities
    
    
    101,911
    
    
    
    144,447Reserve for rate refunds
    
    
    1,839
    
    
    
    14,362Total current liabilities
    
    
    258,154
    
    
    
    314,035Long-Term Debt
    
    
    1,277,944
    
    
    
    1,277,679Other Long-Term Liabilities:Asset retirement obligations
    
    
    231,851
    
    
    
    229,360Regulatory liabilities
    
    
    58,266
    
    
    
    49,808Accrued employee benefits
    
    
    164,081
    
    
    
    164,799Other
    
    
    18,743
    
    
    
    13,487Total other long-term liabilities
    
    
    472,941
    
    
    
    457,454Contingent liabilities and commitments (Note 2)Owners Equity:Members capital
    
    
    1,652,430
    
    
    
    1,652,430Retained earnings
    
    
    2,066,971
    
    
    
    1,987,932Accumulated other comprehensive loss
    
    
    (167,149
    )
    
    
    (169,814
    )Total owners equity
    
    
    3,552,252
    
    
    
    3,470,548Total liabilities and owners equity
    
    $
    5,561,291
    
    
    $
    5,519,716
  7




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Three Months EndedMarch 31,2009
    
    
    2008(Restated)Cash flows from operating activities:Net income
    
    $
    79,039
    
    
    $
    58,723Adjustments to reconcile net income to net cash provided
by (used in) operating activities:Depreciation and amortization
    
    
    61,278
    
    
    
    55,409Deferred income taxes
    
    
    
    
    
    
    4,256Allowance for equity funds used during construction
(Equity AFUDC)
    
    
    (1,416
    )
    
    
    (968
    )Changes in operating assets and liabilities:Receivables  affiliates
    
    
    1,055
    
    
    
    1,393 others
    
    
    (11,092
    )
    
    
    12,021Transportation and exchange gas receivables
    
    
    (2,008
    )
    
    
    (3,309
    )Inventories
    
    
    (3,445
    )
    
    
    (9,780
    )Payables  affiliates
    
    
    (1,141
    )
    
    
    19,415 others
    
    
    5,226
    
    
    
    27,223Transportation and exchange gas payables
    
    
    1,593
    
    
    
    471Accrued liabilities
    
    
    (43,530
    )
    
    
    (53,430
    )Reserve for rate refunds
    
    
    (12,523
    )
    
    
    27,971Other, net
    
    
    (9,948
    )
    
    
    (12,767
    )Net cash provided by operating activities
    
    
    63,088
    
    
    
    126,628Cash flows from financing activities:Additions to long-term debt
    
    
    
    
    
    
    100,000Retirement of long-term debt
    
    
    
    
    
    
    (100,000
    )Change in cash overdrafts
    
    
    (5,420
    )
    
    
    (5,568
    )Common stock dividends paid
    
    
    
    
    
    
    (50,000
    )Net cash used in financing activities
    
    
    (5,420
    )
    
    
    (55,568
    )Cash flows from investing activities:Property, plant and equipment:Additions, net of equity AFUDC
    
    
    (22,398
    )
    
    
    (29,340
    )Changes in accounts payable
    
    
    (1,080
    )
    
    
    (9,272
    )Changes in accrued liabilities
    
    
    1,145
    
    
    
    4,927Advances to affiliates, net
    
    
    (38,757
    )
    
    
    (38,661
    )Advances to others, net
    
    
    125
    
    
    
    (289
    )Purchase of ARO trust investments
    
    
    (8,041
    )
    
    
    Proceeds from sale of ARO trust investments
    
    
    10,237
    
    
    
    Other, net
    
    
    874
    
    
    
    1,621Net cash used in investing activities
    
    
    (57,895
    )
    
    
    (71,014
    )Net increase (decrease) in cash
    
    
    (227
    )
    
    
    46Cash at beginning of period
    
    
    428
    
    
    
    119Cash at end of period
    
    $
    201
    
    
    $
    165
  8




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TRANSCONTINENTAL GAS PIPE LINE COMPANY, LLC
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS
  1. BASIS OF PRESENTATION
 General
       9




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Basis of Presentation
    Recent Accounting Standards
  2. CONTINGENT LIABILITIES AND COMMITMENTS
 Rate Matters
  10




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Legal Proceedings
  Environmental Matters
  11




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12




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Safety Matters
 Pipeline Integrity Regulations
 Appomattox, Virginia Pipeline Rupture
 Other Matters
  Summary
 
 13




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Other Commitments
 Commitments for construction and gas purchases
 Guarantees
  3. DEBT AND FINANCING ARRANGEMENTS
 Revolving Credit and Letter of Credit Facility
  4. FAIR VALUE MEASUREMENTS
 Adoption of Statement of Financial Accounting Standards (SFAS) No. 157
  14




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
    
    Level 1  Quoted prices in active markets for identical assets or liabilities that we
have the ability to access. Active markets are those in which transactions for the asset
or liability occur in sufficient frequency and volume to provide pricing information on an
ongoing basis. Our Level 1 consists of financial instruments in our ARO Trust amounting to
$11.4 million at March 31, 2009. These financial instruments include money market funds,
U.S. equity funds, international equity funds and municipal bonds.
    
    Level 2  Inputs are other than quoted prices in active markets included in Level 1,
that are either directly or indirectly observable. These inputs are either directly
observable in the marketplace or indirectly observable through corroboration with market
data for substantially the full contractual term of the asset or liability being measured.
We do not have any Level 2 measurements.
    
    Level 3  Includes inputs that are not observable for which there is little, if any,
market activity for the asset or liability being measured. These inputs reflect
managements best estimate of the assumptions market participants would use in determining
fair value. We do not have any Level 3 measurements.
 5. TRANSACTIONS WITH AFFILIATES
    15




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6. COMPREHENSIVE INCOME
  Three MonthsEnded March 31,2009
    
    
    2008(Restated)Net income
    
    $
    79,039
    
    
    $
    58,723Pension benefits, net of tax in 2008Amortization of prior service credit
    
    
    (7
    )
    
    
    (122
    )Amortization of net actuarial loss
    
    
    2,672
    
    
    
    195Total comprehensive income
    
    $
    81,704
    
    
    $
    58,796
 16




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ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 General
  RESULTS OF OPERATIONS
 Operating Income and Net Income
 Operating income Net income Operating income Natural gas transportation Operation and maintenance Administrative and general Depreciation and amortization Net income Provision for income taxes Operating income
 Transportation Revenues
 Operating revenues: Natural gas transportation
   17




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Three monthsEnded March 31,Transco System Deliveries (TBtu)
    
    2009
    
    
    2008Market-area deliveries:Long-haul transportation
    
    
    188.5
    
    
    
    216.6Market-area transportation
    
    
    315.5
    
    
    
    276.8Total market-area deliveries
    
    
    504.0
    
    
    
    493.4Production-area transportation
    
    
    45.7
    
    
    
    43.1Total system deliveries
    
    
    549.7
    
    
    
    536.5Average Daily Transportation Volumes (TBtu)
    
    
    6.1
    
    
    
    5.9Average Daily Firm Reserved Capacity (TBtu)
    
    
    7.0
    
    
    
    7.0
 Sales Revenues
   Operating revenues: Natural gas sales
 Storage Revenues
 Operating revenues: Natural gas storage
 18




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Other Revenues
 Other operating revenues: Other
 Operating Costs and Expenses
 Cost of natural gas sales
 
    
    An increase in Operation and maintenancecosts of $5.8 million (10.6 percent) primarily
resulting from:
 o
    
    A $4.0 million increase related to miscellaneous contractual services and
contract labor primarily related to Hurricane Ike damage assessment, ando
    
    A $1.2 million increase related to labor and labor related costs.
 
    
    An increase in Administrative and generalcosts of $5.6 million (16.1 percent) primarily
resulting from:
 o
    
    A $4.5 million increase related to labor and labor related costs,
primarily pension costs, ando
    
    A $1.0 million additional charge associated with a 2008 pipeline rupture.
 
    
    An increase in Depreciation and amortizationcosts of $5.9 million (10.7 percent)
primarily resulting from rate adjustments recorded in March 2008, for the period March 2007
through July 2007, due to final settlement rates.
 Other (Income) and Other Deductions
 Other (income) and other deductions
 Provision for Income Taxes
 Provision for Income Taxes
 Capital Expenditures
  19




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Sentinel Expansion Project
 Pascagoula Expansion Project
 Mobile Bay South Expansion Project
 85 North Expansion Project
 Eminence Enhancement Project
 Asset Retirement Obligation Funding Requirement
  
 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
 None.
 20




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ITEM 4T. Controls and Procedures
  Evaluation of Disclosure Controls and Procedures
  First-Quarter 2009 Changes in Internal Controls Over Financial Reporting
  
  
   
   21




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We are subject to risks associated with climate change.
  Our operations are subject to governmental laws and regulations relating to the
protection of the environment, including those relating to climate change, which may
expose us to significant costs and liabilities and could exceed our current expectations.
  
    
    the Federal Clean Air Act and analogous state laws, which impose obligations
related to air emissions;
    
    the Federal Water Pollution Control Act of 1972, as renamed and amended as
the Clean Water Act (CWA) and analogous state laws, which regulate discharge of
wastewaters from our facilities to state and federal waters;
    
    the Federal Comprehensive Environmental Response, Compensation, and Liability
Act (CERCLA), and analogous state laws that regulate the cleanup of hazardous
substances that may have been released at properties currently or previously
owned or operated by us or locations to which we have sent wastes for disposal
and
    
    the Federal Resource Conservation and Recovery Act (RCRA) and analogous
state laws that impose requirements for the handling and discharge of solid and
hazardous waste from our facilities.
   22




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We may be subject to legislative and regulatory responses to climate change with which
compliance may be costly.
   23




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Our assets and operations can be affected by weather and other natural phenomena.
   
   Exhibit Number
    
    Description3.1
    
    Certificate of Conversion and Certificate of Formation,
dated December 24, 2008 and effective on December 31, 2008
(filed on February 26, 2009 as Exhibit 3.1 to the Companys
Form 10-K), and incorporated herein by reference.3.2
    
    Operating Agreement of Transco dated December 31, 2008
(filed on February 26, 2009 as Exhibit 3.2 to the Companys
Form 10-K), and incorporated herein by reference.31.1*
    
    Certification of Principal Executive Officer pursuant to
Rules 13a-14(a) and 15d-14(a) promulgated under the
Securities Exchange Act of 1934, as amended, and Item
601(b)(31) of Regulation S-K, as adopted pursuant to
Section 302 of The Sarbanes-Oxley Act of 2002.31.2*
    
    Certification of Principal Financial Officer pursuant to
Rules 13a-14(a) and 15d-14(a) promulgated under the
 24




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Exhibit Number
    
    DescriptionSecurities Exchange Act of 1934, as amended, and Item
601(b)(31) of Regulation S-K, as adopted pursuant to
Section 302 of The Sarbanes-Oxley Act of 2002.32*
    
    Certification of Principal Executive Officer and Principal
Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
 25




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TRANSCONTINENTAL GAS PIPE LINE
COMPANY, LLC (Registrant)Dated: May 1, 2009
    
    By
    
    /s/ Jeffrey P. HeinrichsJeffrey P. HeinrichsController and Assistant Treasurer(Principal Accounting Officer)
 26




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EXHIBIT INDEX
 Exhibit Number
    
    Description3.1
    
    Certificate of Conversion and Certificate of Formation,
dated December 24, 2008 and effective on December 31, 2008
(filed on February 26, 2009 as Exhibit 3.1 to the Companys
Form 10-K), and incorporated herein by reference.3.2
    
    Operating Agreement of Transco dated December 31, 2008
(filed on February 26, 2009 as Exhibit 3.2 to the Companys
Form 10-K), and incorporated herein by reference.31.1*
    
    Certification of Principal Executive Officer pursuant to
Rules 13a-14(a) and 15d-14(a) promulgated under the
Securities Exchange Act of 1934, as amended, and Item
601(b)(31) of Regulation S-K, as adopted pursuant to
Section 302 of The Sarbanes-Oxley Act of 2002.31.2*
    
    Certification of Principal Financial Officer pursuant to
Rules 13a-14(a) and 15d-14(a) promulgated under the
Securities Exchange Act of 1934, as amended, and Item
601(b)(31) of Regulation S-K, as adopted pursuant to
Section 302 of The Sarbanes-Oxley Act of 2002.32*
    
    Certification of Principal Executive Officer and Principal
Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
 27